From William Short
Amsterdam Feb. 17. 1791.
My two last letters were of Jan. 25. & Feb. 7. They were sent by the way of England. Since then I learn that a momentary change of the wind has permitted two of the American vessels which had my letters for you, to leave the Texel. There were other letters on board of another vessel which I am told still remains there, the wind having again become contrary. I have been much mortified by the unexampled delay of these letters, but I should have been still more so if those which I sent by the way of England had not informed you of the cause of it.
I have the honor to inform you at present that a loan for the U.S. for two millions & an half of guilders was brought on the market the day before yesterday morning.1 The terms are the same with the last2 except that the commission is reduced one half p. cent. The form of the bond is now making out & as soon as completed I will send you a copy of it. I think you will learn with pleasure Sir that this loan (of which the rate of interest is the same with that paid by the most accredited powers here, & of which the commission is one half of that paid by some & lower than that paid by any except the Emperor, who has no further occasion for money, & who paid the same) was all taken up & contracted for in less than two hours after being published on the exchange; a celerity of which I am told there has been no instance here before in loans for any country. This circumstance cannot fail to give a very favorable impulsion to the credit to which the U.S. are so justly entitled & facilitate the views they may have here in future. I must add also that the accounts which are recieved here of the happy effects of our new constitution & the confidence which its present administration has inspired at this place are the real & efficient causes of the prosperous situation of the credit of the U.S. This consideration is the more agreeable as it shews that it is dependent on themselves & not merely on the management or credit of Agents or other temporary & uncertain means which other powers are sometimes obliged to employ. It cannot be denied however that the times & manner of bringing a loan on the market has much influence on the facility with which it is carried through & that the present is a favorable moment for loans in general & for those of the U.S. in particular.
I mentioned to you in my letter of Dec. 2. that the commissioners of the U.S.3 wished much to fix the loans at three instead of two and an half millions of guilders. I was sensible of the propriety of their observations which I have already communicated to you, but I declined acceding without mentioning to them the only true reason, which was your instruction on that head.4 On the loan being carried off with so much rapidity they have renewed their observations & joined to them other reasons for extending it to three millions which they have pressed on me repeatedly since with a warmth which I did not expect. The principal reason & that on which they seemed to dwell with most earnestness, is the necessity of keeping the undertakers well disposed—that in order to do this it is found necessary to give them all a part in loans which are recieved favorably that they may be disposed to take a part also if at any time the moment should be less favorable—that not foreseeing the very great demand there would be for this loan they had allowed the undertakers as they presented themselves to subscribe for as much as they chose, by which means there was no part left for those who came last. They add that by extending it to three millions they could satisfy them & that otherwise these people at a future time should the U.S. wish to make a loan might from ill humor or resentment decline their aid. Whether this be the true cause or not of the tenacity with which the commissioners adhere to this desire I cannot say. I am sensible however of the weight of the undertakers in loans & of the propriety of not disobliging them. Still I cannot apprehend much from their resentment in a case like this. It seems to me on the contrary that the loan being not pushed now as far as it might be, would rather render them more forward in the case of another being brought on the market. The commissioners however seem to be fully of a different opinion & as it is an affair of meer locality they must necessarily be better acquainted with it than I am. They seem somewhat mortified that I should not therefore follow their advice respecting it. They gave me to understand that I might extend the loan if I judged proper to make use of this favorable moment to four millions, which is beyond the ordinary size of loans & are much astonished at my not doing it. I have not informed them of the true cause of it for a reason which seems to me sufficient, that it is not necessary.
It has seemed to me proper to make you acquainted with this circumstance because I wish you to be completely possessed of all the facts which arise relative to the business on which I came here. Although I have not the same apprehensions of the inconveniences which may accrue from my not complying with the request of the commissioners which they seem to entertain, yet I am free to confess that I think it would have hastened the completion of the wishes of the U.S. if I had done it; & that if I had had the honor of having been longer in relation with you & better acquainted with your views I should have been probably induced to have taken on myself this additional degree of responsability. But my desire in general to follow rigorously the instructions I recieve & the circumstances of this case in particular have made me make this sacrifice of what appeared to me the public interest to my personal tranquillity. In this I hope Sir you will think me justifiable even if the fears of the commissioners should be realized.
I mentioned in my last that the loan would be opened in such a manner that interest would begin for no part before the 1st of March; & this had been agreed on between the commissioners & myself, but at their meeting with the brokers the evening before it was brought on the market they insisted on the propriety of conforming to constant usage in such cases—viz of recieving immediately such sums as should be offered & of allowing the interest to date from the first day of such month in which any part is recieved. The term which they have allowed the undertakers is five months. They have no doubt however that the money will be all recieved long before the expiration of the term; & will accept any bills you may draw for its amount after recieving this letter from thirty to sixty days sight. Having not had the honor of hearing from you relative to the appropriation since your Letter of Sep. 1, I, did not think it necessary to press this matter, & the less so as it is always thought best to give the undertakers the time they ask. 1. because it is their interest to deliver the money as soon as possible & 2. because if they are forced in this delivery & obliged thereby to hasten, in placing the obligations they would injure the market-price.
I suppose it useless to mention to you the advantage that would result from knowing as soon as possible your intentions as to the particular destination of the monies which are from time to time in the hands of the commissioners here, in order to avoid paying uselessly a double interest on such parts as are to follow those appropriated in your letter of Aug. 29. You will readily concieve also that the loans of Congress here being well known to those interested in that appropriation, their expectations will be graduated by these loans; & that it is essential to have some general idea of your intentions in order to know how to meet questions that may be asked & which certainly will be asked.
I have lately recieved a letter from Mr. Gov. Morris5 at Paris in wch. he informs me that he is well persuaded a loan for about a million of dollars could have been made for the U.S. some months ago in a place not in Holland (he does not say what place) on the following terms “The sum to have been at the order of the Secretary of the Treasury at fixed terms & the interest to commence from those terms at 5 p. cent. For commissions, charges & bonus with the express undertaking, for the money about four p. cent.” He adds that having understood from me that my powers were confined to Holland he gave those who had applied to him information that nothing could be done for the present—viz at the time of his speaking to me, which was a day or two before I left Paris. I did not suppose from what he then said that any proposals had been made to him & I should not have thought it prudent to have risked an experiment any where without an absolute certainty of success; for a variety of reasons which will naturally present themselves to you. Under those circumstances I did not perhaps go into any explanations which could give Mr. Morris a true idea of the nature of my powers. This appeared to me the less necessary also because having no intention of making more than one loan before I again heard from you & not being able to entertain a doubt that that could be done more advantageously here than elsewhere, I did not see any means at that time of making an experiment elsewhere. Mr. Morris adds also in his letter that he “will not pretend to say whether such a loan could be made at present because a great part of the disposable cash is probably applied but that if I wish to know he will make enquiry, but would not wish to meddle in it unless I think it could be brought to something.” I am so fully sensible of the advantages which would result from the U.S. being able to make loans, if they should chuse it, in more than one place that I have thought Mr. Morris’s idea not to be neglected & yet I see no means of making use of it at present. I have therefore answered him6 that my wishes were that he would make such enquiries as would reduce that matter to as much certainty as possible, as nothing could justify an experiment without the success being previously ascertained—that I had no reason to believe at present that I should wish to undertake such a loan before April or May—but that there was so great a presumption that a loan out of Holland would then or sooner be agreeable that I thought myself authorized in asking him to make the enquiry—that as to the terms I would say nothing at present as they would of course be to be settled at the time of making the loan. I hope that letters from you in consequence of such as I have formerly written, mentioning the terms on which the loan would be opened here, or of this, stating the terms on which it is opened, will arrive in May or sooner so as to enable me to make use of Mr. Morris’s proposition if it should be found practicable & proper. I must add here also that Mr. Morris mentions in his letter that he is unwilling it should be known here that he has mentioned this circumstance, lest it should expose him uselessly to the resentment of those whose interests it opposes. Although I consider myself authorized to mention his name to you & suppose it proper at the same time as your acquaintance will enable you to form a more perfect judgment of the value of the proposition, yet I think it my duty to do it with the caution he desires. As soon as I know any thing further in this business I will inform you of it. In the mean time I have the honor to be with the most perfect respect & attachment Sir, your most obedient & most humble servant
The Honble. Alexander Hamilton Secretary of the Treasury.
ALS, letterpress copy, William Short Papers, Library of Congress.
1. Rafael Bayley describes this loan as follows: “This loan … was contracted under the authority given by the acts of August 4 and 12, 1790.… After some negotiation … the commission and brokerage were reduced to 4 per cent. It was determined to open a loan for two and a half million of guilders ($1,000,000), at 5 per cent. interest, the reimbursement to begin in ten years and to be completed in five, the United States to have the right to reimburse the whole at an earlier period if deemed proper.… The original contract, as confirmed by the President … provided that the loan should run for eleven years, at 5 per cent. interest, then to be redeemable in the city of Amsterdam, on the 1st day of March in each year until paid, at the rate of 500,000 guilders per annum, the United States to have the privilege of reimbursing the whole sum or any part thereof at any earlier date if they should wish so to do. Two thousand five hundred bonds of the United States, for 1,000 guilders each, were to be issued to the subscribers to the loan, and it was to be determined by lot which of these should be redeemed in any one year” (Bayley, National Loans description begins Rafael A. Bayley, The National Loans of the United States from July 4, 1776, to June 30, 1880 (Washington, 1882). description ends , 23).
2. The terms for the first loan, which was authorized in August, 1790, were five percent interest and four and one-half percent commission charges. For a description of this loan, see H to Willink, Van Staphorst, and Hubbard, November 29, 1790, note 1.
3. The Amsterdam banking firms of Wilhem and Jan Willink, Nicholaas and Jacob Van Staphorst, and Nicholas Hubbard.
5. Gouverneur Morris to Short, February 6, 1791 (ALS, William Short Papers, Library of Congress).
6. Short to Morris, February 13, 1791 (ALS, Columbia University Libraries).